IT industry outlook improving, according to OECD

The outlook for the IT industry is improving, according to the Organisation for Economic Cooperation and Development.

The industry is set to see revenue growth of three to four percent in 2010 in OECD countries, it said in a study. In 2009, the industry declined by six percent in those countries. OECD member countries are principally in Europe, North America and Australasia.

In 2011, growth is expected to exceed four percent, but a return to pre-crisis levels of growth “remains unlikely”, said the report.

In the long term, demand for ICT-related employment will continue to rise as economies become “smarter” and ICT ever more pervasive. “The fact that the ICT sector has not suffered to the same extent as during the 2001 bust, suggests that ICT continues to increase in importance for businesses and consumers,” says the OECD.

It said the ICT sector is better integrated in the “old” economy than it was in 2001. “This makes ICT-related skills even more important for driving innovation and productivity growth and ensuring social inclusion.”

The Information Technology Outlook 2010 report says that spending by governments and business is set to remain weak in the months ahead in OECD countries, with new investment in hardware or software “unlikely in the short-term”.
During the global economic downturn “firms tended to cut IT services costs across the board, but in the recovery more strategic activities have been maintained or increased”, says the report. Companies are now focusing on consolidation and applications to maintain customers and markets.

The report also confirmed the trend of companies moving their production to lower-cost locations in OECD countries and Asian economies. The OECD-area ICT sector has shifted to services which now account for an average of 80 percent of total ICT sector value.

China’s role as a production and sourcing location has intensified. In 2008 China’s ICT exports were only slightly behind the combined exports of the US, the EU27 (excluding intra-European trade) and Japan.

Domestic consumption in emerging markets is helping to make up for the slack in the rest of the world though, says the report. In China, for instance, consumer spending on mobile and telecoms services has picked up, driven by the move to 3G mobile services and equipment.

The rapid growth of the online digital content industry continued in 2009, according to the report. The video games industry has roughly doubled global revenues since 2005 to exceed $50 billion in 2009.

Meanwhile, the music and films industries have yet to show they can limit overall revenue declines by using the business opportunities offered by internet delivery. Growth rates are highest for online films – but from low levels – followed by online games, advertising and music.

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Jim Love, Chief Content Officer, IT World Canada

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